The Boundaries of Banking and Credit Activity
Fintech licensing in Georgia begins, within the competence of the National Bank, with one simple prohibition: no one may take deposits and use them to issue credits without a banking activity licence or a microbank activity licence issued by the National Bank. Taking deposits and issuing credits — the classical banking model — requires a full compliance regime, and this requirement extends to the technological format as well: a mobile application or platform that in fact performs these functions cannot escape licensing by calling itself a technology company. The choice between a banking and a microbank licence depends on the architecture of the business model, and this decision must find its place in the product design in advance.
The Rule on Attracting Repayable Funds
The law draws a boundary on the next step as well: an entrepreneur subject or a group of affiliated persons may not, without registration as a microfinance organisation by the National Bank, a non-bank deposit-credit licence or a banking licence, attract repayable funds from more than 20 natural persons, including by taking a loan, or conduct advertising of the attraction of repayable funds from a wide circle of persons. This norm regulates precisely the step on which fintech startups most often approach the boundary: collecting money from consumers for a future service. The threshold of twenty is counted by the natural persons whose funds are attracted, and crossing it entails registration or a licence.
Exceptions from the Restriction
The restriction does not cover the entire financial space: the law separately lists exceptions that fall under other regulatory regimes. Among them are the public offering of securities, a private offering to an experienced investor, insurance activity, pension schemes, the activity of a brokerage company, a natural person's lending to another non-entrepreneur natural person, a partner's or shareholder's loan to the enterprise and contribution into its capital, services connected with electronic money, investment funds and asset management companies, a securitisation special purpose entity, and cases determined by the National Bank. Each exception rests on its own statute, so choosing the right route means establishing which regime covers the particular product.
Regulation of the Payments Sector
A payment system operator and a payment service provider are supervised by the National Bank in accordance with Georgian legislation — through registration, deregistration, inspection, the establishment of additional requirements, the determination of initial and ongoing capital, the imposition of restrictions and the application of sanctions. The rules of registration and deregistration, the applicable sanctions and the amount of monetary fines are determined by normative acts of the National Bank, and the fine is paid into the state budget. The Bank also decides the questions of the status of an important system and an important provider and the fitness criteria of administrators. Entry into the payments market therefore begins with registration and the planning of capital requirements.
Microfinance, Currency Exchange and Virtual Assets
Supervision of a microfinance organisation and a currency exchange point is determined by Article 50 of the law: the National Bank conducts registration and deregistration, inspection and the issuing of written instructions, requires information on the sources of the origin of capital and on the owners of a significant share, may suspend operations, prohibit the payment of dividends, impose an additional capital requirement, and determine the rules of classification of assets, provisions and liquidation. A virtual asset service provider is obliged to register with the National Bank and satisfy its requirements; the Bank may monitor on site or remotely, set storage and cybersecurity standards, restrict operations on money-laundering risk grounds and impose sanctions.
Frequently Asked Questions
What requirement applies to taking deposits?
Taking deposits and issuing credits with them is possible only under a banking or microbank activity licence.
From how many persons may funds be attracted without registration?
The restriction concerns attracting repayable funds from more than 20 natural persons or advertising such attraction to a wide circle.
Who regulates virtual asset services?
The National Bank: the provider must register with it and satisfy capital, risk management and security requirements.
How We Help on Legal.ge
Fintech licensing begins with the legal qualification of the product and ends with managing the relationship with the regulator. Our team will help you select the correct regime, plan the structure of attraction and prepare compliance with the National Bank's requirements. Contact us for a route tailored to your product.